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Indian stock market and companies daily report (November 18, 2009, Wednesday)

Contributed by Angel Broking

By Angel Broking

The benchmark indices opened on a weak note, only to slip into the red in early afternoon session. Stocks in the Realty, Banking and Energy spaces witnessed selling, whereas those from the IT and Telecom spaces experienced some initial gains. The afternoon session saw the markets languishing in the red. However, after trading in the negative  territory for a large part of the day, the Indian markets staged a sharp recovery during the closing hours of trade and managed to close marginally in the positive. These gains were led by stocks from the IT sector. The Sensex and the Nifty closed with gains of 0.1% each. The BSE Mid-Cap Index lost 0.1%, whereas the BSE Small-Cap Index gained 0.2%. Among the front liners, TCS, Hero Honda, Infosys, Reliance Infra and HDFC Bank gained between 2-4%, while ONGC, ACC, DLF, Bharti Airtel and RCOM lost between 2-3%. In the Midcap segment, S Kumars Nation, Shaw Wallace, Redington, HT Media and PVP Ventures Ltd gained between 3-7%, while AllCargo Global, Panacea Biotech, IVRCL Infra, Himadri Chemicals and Anant Raj Industries lost between 9-15%.

Markets Today
The trend deciding level for the day is 5049 / 17005. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 5087 – 5113 / 17126 - 17202. However, if NIFTY trades below 5049 / 17005 for the first half-an-hour of trade then it may correct up to 5024 / 16929.

Cox & Kings IPO – Subscribe

Cox and Kings (C&K) is a global tour operator, deriving around 90% of its revenues from the leisure segment. The company has a strong presence in the emerging and developed markets, and offers travel, forex and visa services. Over FY2006-09, C&K’s Revenues and PAT have witnessed a CAGR of 65.6% and 80.7%, respectively; these, however, have also been aided by the five acquisitions it has made across the globe since 2006. Going ahead, we estimate C&K’s Top-line and PAT to witness a CAGR of 27.4% and 37.7% over FY2009-11E, respectively. On the lower and upper end of the price band, the stock would quote at 16.5x and 17.3x its post diluted FY2011E estimates, respectively. On the back of positives like C&K’s superior growth rates, its wide geographical reach, a strong brand franchise and the improving industry dynamics, we recommend a Subscribe view on the IPO.

Change in Recommendation – Grasim and Ultratech Cement

Grasim
We believe that the swap ratio approved by the Ultratech board is positive for the shareholders of Grasim Industries (Grasim), as the board would have considered a holding-company discount before arriving at this figure. Our revised SOTP Fair Value for Grasim works out to Rs2,524. On account of the recent run-up in the stock price, we have revised our rating from Buy to Accumulate.

Ultratech
The merger is expected to be favourable for Ultratech, as it would become India's largest cement company. The company, which until now was concentrated in Western and Southern India, will achieve a pan-Indian presence. Moreover, the company's operating and return ratios are expected to improve going ahead, due to the superior operating parameters of Samruddhi's cement business. On the valuation front, we have valued Ultratech at an average of a Target EV/EBITDA of 6x and an EV/tonne of US $100, to arrive at a revised fair value of Rs868 (Rs880 earlier), which is at a discount to the target valuations of its peers like ACC (EV of US $105/tonne) and Gujarat Ambuja (EV of US $115/tonne). Hence, we recommend a Buy on the stock.

Economic and Political News
- Government clears 17 FDI proposals worth Rs1,159cr
- Domestic crude oil production falls 1.2% in H1FY2010: CMIE
- Govt. plans to earmark Rs3,00,000cr for education under 11th Plan

Corporate News
- RIL fixes 27 Nov, 2009 as record date for Issue of 1:1 Bonus Shares
- Reliance Energy to provide 26,250 new connections in Mumbai
- BHEL sets up transformer manufacturing unit at Bhopal